Has your IT vendor pitched you a private cloud yet? If not, watch out. They're all selling them these days, so it's only matter of time before you'll hear the spin. It's tempting to dismiss the whole idea, because so much cloud computing news amounts to just old products with a new name. But don't throw the baby out with the bathwater. There is something to it.

I can't tell you how many times I've heard people say, 'We're doing a private cloud,' when they mean virtualization.

Mike Pearl, head of cloud computing at PwC

Private clouds offer many of the advantages of public cloud services but without the security concerns and compliance issues that give IT managers the heebie-jeebies. The ability to get instant access to a technology service at a fraction of the cost of traditional IT deployments means that your company can bring new products to market faster. This translates into more dollars for the bottom line. These days, it's hard to ignore this idea.

So if private clouds are potentially so revolutionary, why hasn't every company built one?

Signs of slow-moving change According to Forrester Research Inc., a Cambridge, Mass.,- based analyst firm, which surveyed 2,000 IT decision makers from North America and Europe, 24% prioritized building a private cloud in 2010, versus 19% in 2009 -- which hardly indicates a tidal wave of interest.

Mike Pearl, the head of the cloud computing practice at PricewaterhouseCoopers, said the pressure to drive down IT costs has pushed large companies toward the private cloud model. But Pearl said that companies have moved slowly because a cloud architecture can upset shops' existing technologies and processes. And of course, IT departments aren't convinced that this architecture is the way forward.

"They're interested in shifting the bulk of the spending to IT that drives innovation rather than IT that's focused on keeping the lights on," he said. "But the jury is still out on how to do this and if it is even achievable."

Terminology complicates the matter further. "I can't tell you how many times I've heard people say, 'We're doing a private cloud,' when they mean virtualization," Pearl said.

Virtualization is a core feature of the infrastructure layer of a private cloud, but above this is an orchestration layer, and above this, a self-service portal. These layers of technology must all be loosely coupled and controlled through a service bus, enabling dynamic expansion and contraction of resources based on need. All these elements together make up a private cloud.

But many companies are still reaping the benefit of infrastructure investments in virtualization, which has a solid return on investment attached to it. Cloud doesn't have the same, simple ROI. According to Pearl, it's like asking, "How long is a piece of string?"

More on private cloud:

Nevertheless, a company's virtualization plans signal private cloud interest. James Staten, a principal analyst at Forrester, notes that virtualization adoption alone isn't a significant factor in determining whether an organization is more likely to prioritize a private cloud. It's whether this implementation is growing that matters more.

Staten's research shows that of those companies that have prioritized a private cloud, 64% have expanded or upgraded their server virtualization implementation -- compared with just 56% of those respondents that don't prioritize private cloud. These numbers decrease precipitously to 11% and 14%, respectively, for companies that haven't expanded their server virtualization environments.

The building blocks of a private cloud Most companies know that you can't build a private cloud without first virtualizing your infrastructure. But few realize that automation software, a self-service portal and IT chargeback features are also key components of a private cloud. But buying a cloud-in-a-box product, such as Cisco Systems Inc.'s Unified Computing System (UCS) or IBM's CloudBurst, does not mean you have a private cloud. The key elements of a private cloud include the following:

Self-service portals: access to a Web-based system that enables on-demand consumption of IT services.

Policy-based controls: rules, policies and other mechanisms that govern the terms and conditions of IT resource consumption.

Standardized hardware: servers and other hardware resources that are under the centralized control of the IT supply chain and lifecycle.

Automated deployment and maintenance: software and other management tools that eliminate manual administration as well as reduce cost and variability of IT resource maintenance

Targeted independence: the ability to move services dynamically between internal and external deployment environments based on price, performance or policy.

Elasticity: the ability to provision, de-provision, and scale resources up and down on demand.

Another key element of a private cloud is automating server management and maintenance, as well as management of other resources, including networks, storage and so on. But nearly half the respondents to Forrester's survey said they have no plans to invest in automation software for their virtualized environments, with 21% of cloud builders saying that automation software investments are at least a year away. Only 11% of cloud builders reported having a self-service portal in place today, while 62% showed interest but won't implement a portal anytime soon. Chargeback is even less appealing, with 68% of cloud builders indicating no investment plans in chargeback capabilities.

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